AMD To Outsource All Chip Production?

It looks like AMD is considering an exit from the costly chip fabrication business. This might seem a strange move as many were speculating that part of the advantage of picking up ATI was that they could help the graphics firm eliminate the overhead caused by outsourcing chip fabrication. It's unclear if the union has provided enough work to make the fabrication plants and associated R & D as profitable as AMD would like. Most fabrication companies often have multiple customers which helps them evenly distribute the cost of upgrading their process technology. The idea of AMD and ATI together might have made swallowing those upgrade costs a bit more feasible, but it seems that it might not have been enough.

"2007 has not been kind to AMD. The company saw its workstation market share slip, has taken on $2 billion of new debt, lost almost $1.2 billion over the past two quarters, has been unable to close the gap with Intel when it comes to CPU performance, and has been the subject of recent rumors that Barcelona will be delayed. AMD has been in cost-cutting mode for the past several months and, according to IDG News Service, is considering getting out of the fabrication business.

Currently, AMD operates two fabs: Fab 30 and Fab 36. Fab 30 is in the process of being fitted to handle 300mm production, and when the transition is complete, it will be rechristened Fab 38. It hasn't come cheaply, either—the chip maker has invested over $2.5 billion to expand its 300mm capabilities. AMD has also been talking up a new 45nm plant in Malta, NY, that would come online in 2009."